Horses have been one of the signature sectors of Kentucky’s agricultural economy for many years. Equine receipts were the top agricultural commodity in the Bluegrass State for several years following the tobacco buyout and are typically one of the major economic contributors. However, like most sectors of the economy, equine markets were heavily impacted by the recession.

Keeneland sales, a major driver of Kentucky equine receipts, fell by 53% from 2007 to 2010. Since that time period, equine markets have been largely in a state of recovery. Keeneland sales for 2014 were up by 40% from those reduced 2010 levels. Figure 1 shows the decrease in sales levels from 2007 to 2010 and the rally through 2014.

In addition to sales, stud fees are also a significant revenue stream for the equine sector. Figure 2 below shows an estimate of stud fee revenues in Kentucky based on the Kentucky Thoroughbred Breeder’s Incentive Fund payouts. These estimates are likely conservative, since not all breeding activity is subject to sales taxes, such as using shipped semen, the stallion and mare both having the same owner, and the use of season shares and foal shares. However, the trend in revenues is likely a reasonable representation of the trend in breeding activity during this time period. According to Figure 2, stud fee revenues followed a similar pattern of weakness from 2007 to 2010, but have shown some improvement since then.

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Recall that stud fee revenues are based on two factors: the stud fee and the number of mares bred. The only definitiv